But China's Shanghai Composite Index rebounded by 0.9 percent to 2,059.52, shrugging off Thursday's gloom over the preliminary results of HSBC's survey of Chinese factory purchasing managers in January, which indicated a contraction the first time since July.

"Apart from the Shanghai Composite, the rest of the region seems to be struggling to gain traction heading into the weekend," Stan Shamu, a strategist at IG Markets in Melbourne, Australia said in a report.

Overnight, lackluster earnings and a rise in U.S. jobless claims upstaged indicators from a survey showing manufacturing output in Europe rose to its highest level in nearly three years.

The Dow closed down 175.99 points, or 1.1 percent, at 16,197.35. The S&P 500 lost 16.40 points, or 0.9 percent, to 1,828.46.

Benchmark U.S. crude contract for March delivery continued to rise, gaining 24 cents to $97.56 in electronic trading on the New York Mercantile Exchange after the U.S. Energy Information Administration confirmed that stockpiles of heating oil and diesel are shrinking as extreme cold has driven up demand.

In currencies, the euro fell to $1.3685 from $1.3689 late Thursday. The dollar fell to 103.38 yen from 103.45 yen.